Building Public Trust: The Future of Corporate Reporting.

• Author: Gillan, Kayla J.
• Position: Director Library

WORKS OF FICTION commonly reflect the identity of our demon du jour; in the past, we as a culture have periodically blamed our problems on greedy used-car salesmen, greedy attorneys, greedy Wall Street dealmakers, and greedy politicians. Today, the finger of blame--rightly or wrongly--is pointed directly at greedy corporate and accounting executives. No one familiar with today's turbulent markets would seriously disagree that the credibility of U.S. corporate reporting is at an all-time low. Rather than wallow in "the blame game," as do so many of the post-Enron/WorldCom books currently on the financial shelves of your local bookstore, Building Public Trust attempts to propose solutions.

Authors Samuel DiPiazza, CEO of PricewaterhouseCoopers (PWC), and Robert Eccles, a founder of Advisory Capital Partners and a senior fellow of PWC, have captured the issues and sentiment of U.S. market participants as of a particular point in time: after the dramatic implosion of Enron. Unfortunately, the crisis of confidence in reporting only began with Enron. Since then, more companies have unraveled--WorldCom, Global Crossing, Tyco, just to name a few. Thus, Building Public Trust misses the opportunity to call on the details of these scandals for additional lessons and perspectives. This is not a criticism of the book or its authors; rather, it is a comment on the fact that when Enron first raised its now infamous face, few believed that its problems were shared by so many other prominent companies.

This being said, Enron--even by itself--represents an important case study on which to build the tenets of improved corporate reporting. As the authors candidly acknowledge, the loss of public faith in the integrity of our markets is very real. Even though much of the "value" that the Enron debacle destroyed may not have been "real," there were real consequences to many, including lost jobs, lost retirement security, damaged reputations, and eroded faith. Recovery will be as much a matter of culture, ethos, spirit, and character as it will be a matter of rules and organizational structure.

DiPiazza and Eccles offer three broad steps toward recovery.

1. Improve accountability of all participants within the "Corporate Reporting Supply Chain." This chain, so say the authors, includes independent boards, company management, independent accountants, analysts, standard setters, regulators, information distributors, and investors.

   While I found much of this...